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Telekom mum on Sprint as earnings beat forecasts

Deutsche Telekom's head declined to comment Thursday on speculation it was looking at buying US mobile operator Sprint Nextel as it reported better-than-expected first quarter results.

Telekom mum on Sprint as earnings beat forecasts
Deutsche Telekom CEO Rene Obermann Photo: DPA

German weekly Der Spiegel reported this week that Telekom was looking to make the most of the strong euro and make a bid for loss-making Sprint Nextel to merge with its T-Mobile USA unit and take on market leader AT&T Wireless.

But speaking in a conference call, chief executive Rene Obermann declined to comment, saying only that in view of recent movements in Telekom’s share price, “certain investors appear to have taken the rumour seriously.”

Net income in the first quarter, adjusted for one-off factors, rose 33.2 percent to €750 million ($1.2 billion), more than €100 million better than the average analyst forecast.

Sales, however, continued to drop due to the weak dollar and pound and cut-throat competition in the German fixed-line telephony market, falling 3.1 percent to €15 billion.

If the dollar and sterling had been at the same exchange rate compared to the euro in the first three months of last year, revenues would have been €500 million higher, Obermann said.

Obermann also said he was satisfied with Telekom’s DSL business. Despite tough competition, the company managed to win 540,000 new customers to hold 43 percent of Germany’s broadband internet market.

But the former monopoly shed a massive 460,000 customers to other providers and Obermann admitted Telekom expected to lose between 1.7 million and 1.9 million traditional telephone connections in this year alone.

The company is also continuing with its rationalization plans. Telekom will cut 13,000 jobs in 2008 and an end to the redundancies is not in sight. “The personnel restructuring is still on the agenda and will continue,” Obermann said.

afp/dpa

AMAZON

Germany opens ‘anti-competition’ probe into Amazon with tougher law

Germany's competition authority said Tuesday it had opened an inquiry into online retail giant Amazon over potential "anti-competitive practices", using a new law giving regulators more power to rein in big tech companies.

Germany opens 'anti-competition' probe into Amazon with tougher law
An Amazon warehouse in Brandenburg. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Federal Cartel Office head Andreas Mundt said his office is examining whether Amazon has “an almost unchallengeable position of economic power” and whether it “operates across various markets”.

If so, it would be deemed of “paramount significance”, said Mundt, adding that the regulator could “take early action against and prohibit possible anti-competitive practices by Amazon”.

“This could apply to Amazon with its online marketplaces and many other, above all digital offers,” he added.

Under the amendment to Germany’s competition law passed in January, the watchdog said it now has more power to “intervene earlier and more effectively” against big tech companies, rather than simply punishing them for abuses of their dominant market position.

READ ALSO: ‘I want to know origin of my grapes’: Amazon loses fruit and veg ruling in German court

The German reform coincided with new EU draft legislation unveiled in December aimed at curbing the power of the internet behemoths that could shake up the way Silicon Valley can operate in the 27-nation bloc.

The push to tighten legislation comes as big tech companies are facing increasing scrutiny around the globe, including in the United States, where Google and Facebook are facing antitrust suits.

The Amazon probe is only the second time that Germany’s Federal Cartel Office has made use of its new powers, after first employing them to widen the scope of an investigation into Facebook over its integration of virtual reality headsets.

The watchdog already has two traditional abuse control proceedings open against Amazon.

One involves the company’s use of algorithms to influence the pricing of third-party sellers on Amazon Marketplace, while another is probing the extent to which Amazon and major producers such as Apple exclude third parties from
selling brand products.

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